Passing on service charge arrears a second time to the next seller

L

lantus

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It is come to our intention that the recent purchaser of a property who paid the outstanding arrears on that property now intends to pass all those costs on a second time to the next buyer (no doubt to enhance his profit.) They are requesting the company furnish documents to assist in this.

Firstly, I assume that I am correct in saying that this is potentially both an illegal and fraudulent act? Once arrears or a service fee is paid you cannot just keep pasing them along the line to others during the next sale.

What is the procedure for dealing with this? Would the PSRA deal with this?
 
Can I just check?

John bought an apartment. There were arrears of service charge. They were cleared before, or shortly after, the closing. There are now no arrears - unless they have built up subsequent to John's purchase. John is now selling on. His solicitors have requested the usual information from the Management Company - including, usually, a confirmation that there are no arrears.

What have the solicitors or John asked for that is outside the picture painted above? What makes you think there is anything wrong? There are either arrears or there are no arrears.

mf
 
Its not the solicitor that is requesting it. Its the owner who wants to try and pass on the arrears that he paid to the next buyer directly (its a quick sale and turnaround.) but wants official invoices from us to prove it.

its obviously wrong but who does it get reported to?
 
No, just not getting this.

If there are no arrears, because they've been paid, then the MC cannot issue invoices. Unless they are copies old invoices, since paid. What is to stop the vendor from just issuing the invoices he got when he was buying? What does he want the MC to do? Issue fresh invoices? Just don't issue them.

Why do you want to report it to anyone? Just don't get involved.

mf
 
It's hard to follow your original post. It's all about the detail-but you left it out!!

Would agree with MFI-if there are no arrears, you cannot issue documents that show arrears as they would be fraudulent. Just give the statement of account as it stands and decline to issue anything else. The buyers solicitor should be determining the status via the requisitions on title (?) doc anyway
 
What I don't get is how the purchaser paid the arrears in the first place? The management company should not release the paperwork to complete the sale without arrears having been cleared by the vendor or a judgement being in place against the sale.
 
It looks like the original seller sold the apt for (e.g.) 80k. It had 10k arrears to the MC. So buyer says I give you 80k and 10k to the MC. Sale price should have been 90k but was only 80k. Stamp duty fraud ? Bank has rights to sale price as final debt solution ergo seller does not have to stump up the 10k arrears himself ? Maybe it was a guy who was about to go bankrupt and states he only has 80k instead of 90k assets ? Just putting it out there.
 
Hi Elcato

That is a very interesting interpretation.

Can a seller sell a house without paying off the arrears of management charges?

Would the solicitor for the seller not have to agree to discharge the arrears from the sales proceeds?

Brendan
 
The deal could be done away from the solicitors. The 10K could be paid before the solicitors get to see the files.
 
Lets say buyer and seller have a meeting down the pub.

Seller says "I need 90K but I owes the MC 10K and I can't sell till that is paid".
Buyer gives the seller 10K to pay off the fees and then agrees to buy for €80k. As far as solicitors are concerned there are no MC fees outstanding and the sale is for 80K.
 
I think this sort of practice was widespread in the good old days of high stamp duty.

The value of "Carpets and Curtains" was huge.
 
It sounds like the fact that the resale is happening fairly quickly that Time's interpretation is correct. Trust and cash would be the main stumbling blocks to the deal but I'm guessing the buyer got a bargain and can turn in a quick profit. Keep checking the court cases and we might see this being brought up in some case or other. One example of this that springs to mind is a recent high profile one where the seller sold for cash but was allowed live in it rent free for the last year.
 
Ok, badly explained but I have the answer anyway!

Basically the purchaser of the property paid all the outstanding fees and the arrears are zero but they now want invoices from us to pass onto the next purchaser which include all the past arrears they paid.

Theres a property company being used as an intermediary on behalf of the purchaser which is trying to obtain this from us. You couldn't make this stuff up!
 
Hi Lantus,

I'm not clear, are you the managing agent, or managing company of the appartment in the transaction?

I can't see that wanting to pass on the cost of clearing arrears is illegal, but your sole function in the transaction is to make sure the fees are up to date, since they are up to date then you are finished? If they want an invoice, then surely they have an invoice for the fees they have paid? If not, do they have a statement of fees paid, or something like that? Either way, not your problem?

ETA, are the two purchasers refered to in the above quote the same person (or company)? Is the purchaser who is looking for the invoice the person (or company) who currently owns the appartment, or the person (or company) who is thinking of buying the appartment?
 
Lantus.I gather that the arrears of €10,000 are cleared and paid to the Management Co. If there is a receipt lost by all means issue a duplicate to whoever paid the arrears and to nobody else. Let them sort out their own mess and do not create a mess for yourself.
 
Can you explain what your role is here-as a director of the OMC? If the seller is requesting a statement or invoice that would show a standing with the OMC that is false, then you do not have to provide it. In doing so, IMO, you would be facilatating a fraudulent act.
 

Acting as director.

As stated I am happy that this is not something we will be doing and I agree that it is potentially fraudulent. Passing on past arrears to a new purchaser would also violate the data protection act as essentially a company director would be providing personal financial information to a person other than that it is associated with.

Should the ODCE or PSRA be notified of this activity? Just to cover ourselves as well. Or is it just simply a matter of ignoring them.
 
I think the confusion is between invoice and receipt. If you do issue an invoice you just mark on it PAID IN FULL.

The things people get up to. Or how to make something simple complicated.
 
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